Over the 2016 June quarter, Canberra’s growth performance exceeded that of other Australian capitals
Following a dip during the March quarter, Canberra has recovered in spectacular fashion as the median house price has climbed to over $650,000, representing a rise of 3.1%.
Craig Bright, spokesperson for REIACT, suggested a shortage of property stock in inner-city suburbs may have contributed to the price hike.
In addition, Andrew Wilson, chief economist at Domain Group, attributes the increase to strong migration, a booming economy, high auction clearance rates and low interest rates. The growth is also driven by “a consolidation of confidence” in the capital.
Units oversupplied
While house prices may be on the up and up, unit values are starting to suffer.
With an exceptionally high number of apartments being constructed in the ACT in the last 12 months, the median unit price decreased by 4.4% over the year, down to below $400,000 – the lowest median recorded since December 2009.
Nonetheless, rental yields remain strong for investors as vacancy rates continue to stay low. In fact,
Canberra has the lowest vacancy rates of all the capital cities, although it’s expected that the vacancy rate for units may soon level off due to increasingly supply.
The unit market is grappling with issues such as the modified investor lending criteria, high supply and limited capital growth, according to Herron Todd White. This drives buyers to consider detached housing instead.
The suburb of Ngunnawal is a prime example of this trend – median house prices here rose by 12% while unit prices increased by only 2%.
However, Kirk Coningham, executive director of Master Builders ACT, indicates there is a chance that demand will adequately match the supply of existing stock, with low prices allowing people to enter the market.
“Larger apartments are selling off the plan straight away; I see those as house alternatives. A big apartment with three beds, two bathrooms and a large floor plan has become a viable alternative in Canberra.”
SUBURB TO WATCH
Wanniassa: Tuggeranong suburb offers big value
In the region of Tuggeranong, Wanniassa offers buyers good-value housing. For approximately half-a-million dollars they can get a large home on a big block of land. And with rental yields strong at roughly 5%, it is unsurprising that this suburb has been seeing considerable growth over the past year.
In addition, Wanniassa boasts various amenities. The Erindale Centre is home to many retail stores, and there is a supermarket at the Wanniassa Centre. The suburb also has an Active Leisure Centre with a pool and playing fields to meet fitness needs. For arts and learning, there is a theatre, library and several schools. Erindale College, in particular, is known for its strong sports program.
Wanniassa is roughly 30 minutes from Canberra’s CBD. Some of the bus routes that run through this suburb also service other Tuggeranong suburbs, making Wanniassa readily accessible.
